Danone’s Oikos Triple Zero: Analysis
Greek yoghurt has been one of the most buoyant food categories in the US in recent years but, with growth slowing and competition fierce, manufacturers are on the look-out for ways to boost sales. Danone has launched Oikos Triple Zero, a product it hopes will attract more protein-hungry male consumers to the fixture. Will the French company succeed? Dean Best investigates.
After years of booming sales, the Greek yoghurt category in the US saw sales slow in 2014 and, after investment in production capacity across the sector, heavy promotional activity.
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Growth in the category remains strong. Euromonitor estimates sales increased 13% in 2014 but that was down on the 37% growth seen in 2013 and manufacturers are searching for ways to give fresh impetus to sales, not least at a time when competition on price has eroded profitability.
Last week, Danone launched Oikos Triple Zero, which the company hopes will expand its potential customer base in the US from a “predominantly female consumer”.
Danone is targeting men through the launch of Oikos Triple Zero, which has 15g of protein and has no added sugar, artifical sweeteners and fat. It has also hired American football player Cam Newton to market the new product.
Increased consumer interest in protein has been a central factor in the development of the Greek yoghurt category in the US in recent years and men have shown some interest in the aisle. However, women still make up the majority of sales, even as male-focused products like Powerful Yogurt – launched in 2012 – have come onto the market.
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By GlobalDataDanone’s bid to encourage more protein-hungry male consumers to the yoghurt aisle appears, on paper, a wise move. However, some industry watchers have concerns about the product Danone has brought to market to try to win over more men.
“I think there is potential for a high-protein snack yoghurt for men but I think that Oikos Triple Zero looks like a product that is trying a little too hard to be all things to all people and runs the risk of being nothing to anyone,” Tom Vierhile, innovation insights director at Datamonitor Consumer, tells just-food.
Vierhile highlights differences between Powerful Yogurt and the new Oikos line. “Powerful Yogurt is generally viewed as the first Greek yoghurt for men, and one of the key platforms for the product was to promise a more satisfying snack experience for men, which was achieved with an 8oz serving size, 33% larger than the standard 6oz serving size,” he explains. “Danone has gone in the opposite direction, with a relatively puny 5.3oz size, which is a smaller serving than the company’s own Light & Fit yogurt, which weighs in at six ounces and can easily be seen as a product more oriented toward women than men. The advertising for Oikos Triple Zero may be trying to appeal to men but the serving size rebuffs that to a certain extent.”
Danone defends the size of cup used for the new product. “The cup size and 15g of protein per serving of Oikos Triple Zero is very appropriate for men for a Greek yoghurt,” a spokesperson for Dannon, Danone’s US arm, says. “Remember that when the market standard for a yoghurt serving was 8oz about ten years ago – before migrating to 6oz – the consumer preference was for less than 8oz per serving.”
Powerful Yogurt CEO Carlos Ramirez is relaxed about Danone parking its tank squarely on his company’s lawn. Speaking to just-food, he reveals the launch of Oikos Triple Zero had already had an impact on his business. He says one major national US grocer had warned him a launch from Danone was in the pipeline. “I had a pitch at Safeway a few months ago and the buyer said ‘Hey I’m taking this brand and they are going to have a national campaign.’ We are feeling the heat a little bit,” he says.
However, Ramirez says Danone’s launch and investment will attract male consumers who had not considered eating yoghurt to the aisle and insists Powerful Yogurt can prosper. Ramirez believes Powerful Yogurt – with 25g of protein in its 8oz cup – will stand up well to what he insists is an Oikos product that does not meet the needs of male consumers looking for snacks packed with protein.
“I know in the mid term we will be perfectly fine as our values proposition is going to come out,” he says. “Danone, with all of the research capability it has, could have done better. It’s 15g of protein. If you look at Yoplait, the most feminine product, that is also 15g of protein. All the research we have and feedback from consumers, especially male consumers, also shows they don’t care about fat-free actually. Danone has a value proposition of triple zero and guys couldn’t care less. Guys are all about protein, a satisfying meal or snack. The proposition of zero, zero, zero is more for women. I saw a disconnect there between what the consumer wants and what they are proposing.”
However, Danone insists no fat, no added sugar and no artifical sweeteners are “attractive propositions to men and women alike” and would appeal to “a broader base of American shoppers, who are quite protein focused and historically have not looked to yoghurt as a protein snack”.
Powerful Yogurt’s larger cups contain between 9g and 20g of sugar depending on the flavour of the product and Ramirez acknowledges the absence of added sugar in Oikos Triple Zero is “good” for the new line. Nevertheless, he adds: “We have products in Whole Foods and Walmart. The Whole Foods consumer of course looks at sugar a lot. The Walmart consumer couldn’t care less; it’s all about protein, that’s it. The sugar thing is not for the mainstream market, it’s more for the hardcore market,” he insists.
How Danone sweetens Oikos Triple Zero has also come in for some questions. Euromonitor analyst Virginia Lee expresses concern about Danone’s use of stevia in the new yoghurt. “Stevia in food and beverages has been problematic. I feel there are a lot of people who do not like stevia because of the bitter after-taste,” she says.
Danone insists it has received “positive feedback” about the new yoghurt’s taste but the use of stevia in food and drink products has had mixed reviews. It will be interesting to see how the use of the zero-calorie sweetener plays out.
The French group has identified a growing niche in yoghurt in the US. Powerful Yogurt’s sales from yoghurt – it also manufactures snack bars and drinks – was US$770,000 in 2013, the first year of its formal launch. In 2014, sales from yoghurt were $2.1m and Ramirez says he is “shooting for” $7.5m in sales in 2015.
Across the yoghurt sector, there will be a hope new products like Oikos Triple Zero will help lift prices after a period of deep discounts. “Chobani, Danone and Yoplait started doing these ten for $10 deals and they literally destroyed the margins in the industry,” Ramirez says. “They noticed that and now everyone is starting to come up on prices. It’s impossible to sell yoghurt for $0.99. This type of product proposal will help them bring prices up and restore the margins in the industry.”
However, in the early days of the launch of Oikos Triple Zero, the jury is out about whether Danone has come up with the right product to tap into a growing niche.
